question

Cycle counting:
assumes that all inventory records must be verified with the same frequency
provides a measure of inventory turnover
is a process by which inventory records are verified for accuracy
assumes that the most frequently used item must be counted more frequently

answer

is a process by which inventory records are verified for accuracy

question

A disadvantage of the fixed-period inventory system is that:
a stockout is possible.
it involves higher ordering costs than fixed-quantity inventory systems.
additional inventory records are required.
the average inventory level is decreased.

answer

a stockout is possible.

question

Inventory record accuracy would be decreased by:
using ABC analysis
increasing reorder points
using cycle counting
increasing stockroom accessibility

answer

increasing stockroom accessibility

question

The two most important inventory-based questions answered by the typical inventory model are:
when to place an order and what is the cost of the order.
when to place an order and how many of an item to order.
how many of an item to order and with whom the order should be placed.
how many of an item to order and what is the cost of this order.

answer

when to place an order and how many of an item to order.

question

Most inventory models attempt to minimize:
the number of orders placed
total inventory based costs
the likelihood of a stockout
the number of items ordered

answer

total inventory based costs

question

In the probabilistic model, increasing the service level will __________.
increase the cost of the inventory policy
have no impact on the cost of the inventory policy
reduce the cost of the inventory policy
have an indeterminate impact on the cost of the inventory policy

answer

increase the cost of the inventory policy

question

The difference between the basic Economic Order Quantity (EOQ) model and the production order quantity model is that:
there are no holding costs in the production order quantity model.
the production order quantity model does not require the assumption of a known, constant demand.
the economic order quantity model does not require the assumption of known, constant lead time.
the production order quantity model does not require the assumption of instantaneous delivery.

answer

the production order quantity model does not require the assumption of instantaneous delivery.

question

Which of the following should be higher in P systems than Q systems?
Order size
Lead time
Demand
Safety stock

answer

Safety stock

question

One use of inventory is __________.
to ensure that item cost is maximized
to tightly link production and distribution processes
to provide a hedge against inflation
to tightly link a firm's production with its customers' demand

answer

to provide a hedge against inflation

question

The appropriate level of safety stock is typically determined by
minimizing the expected stockout costs.
carrying sufficient safety stock so as to eliminate all stockouts.
choosing the level of safety stock that assures a given service level.
taking the square root of the economic order quantity.

answer

choosing the level of safety stock that assures a given service level.

question

Generally, inventory types are divided into four main categories. Which of the following is not one of the four main categories of inventory?
Maintenance/repair/operating inventory
Work-in-process inventory
Safety stock inventory
Raw material inventory

answer

Safety stock inventory

question

Extra units that are held in inventory to reduce stockouts are called __________.
just-in-time inventory
demand variance
safety stock
reorder point

answer

safety stock

question

An inventory decision rule states "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is true?
100 is the lead point, and 14 is the safety stock.
100 is the reorder point, and 14 is the order quantity.
14 is the reorder point, and 100 is the order quantity.
14 is the safety stock, and 100 is the reorder point.

answer

14 is the reorder point, and 100 is the order quantity.

question

A system that keeps track of each withdrawal or addition to inventory continuously is __________.
a fixed-period inventory system
a perpetual inventory system
a continuous inventory system
a fixed-quantity system

answer

a perpetual inventory system

question

A production facility is trying to determine the best batch size for an item that is produced intermittently. This item has an annual demand of 1,000 units, an annual carrying cost of $10 per unit, and a setup cost of $400. They operate 50 weeks per year, and can produce 40 units per week. What is the best batch size for this item?
65
283
400
800

answer

400

question

Inventory management policies based on ABC analysis might include investing
extra care in forecasting for C items.
the most time verifying the accuracy of records for B items.
more in inventory security for C items.
more in supplier development for A items.

answer

more in supplier development for A items.

question

Which of these conditions is not necessary for the economic order quantity model to be valid?
The item has a constant purchase price.
The item has a constant demand.
The item has a constant lead time.
The item has a constant order cost

answer

The item has a constant purchase price.

question

The primary purpose of the basic economic order quantity model shown below is
to maximize the customer service level.
to calculate the optimum safety stock.
to minimize the sum of setup cost and holding cost.
to calculate the optimum reorder point.

answer

to minimize the sum of setup cost and holding cost.

question

A system that triggers ordering on a uniform time basis is called
a fixed-period system.
a reorder point system.
an EOQ.
a fixed-quantity system.

answer

a fixed-period system.

question

If demand is not uniform and constant, the stockout risks can be controlled by __________.
placing an extra order
raising the selling price
increasing the EOQ
adding safety stock

answer

adding safety stock

question

The production order quantity model
is appropriate when units are produced and sold simultaneously.
uses ordering cost, not setup cost, in its formula.
results in larger average inventory than an equivalent EOQ model.
relaxes the assumption of known and constant demand.
assumes instantaneous delivery

answer

is appropriate when units are produced and sold simultaneously.

question

ABC analysis generally divides on-hand inventory into three classes based upon
annual demand.
item quality.
annual dollar volume.
unit price.

answer

annual dollar volume.

question

What is a system for ordering items that have little or no value at the end of a salesâ€‹ period?
A.
production order quantity model
B.
ROP
C.
EOQ
D.
â€‹single-period inventory model

answer

D.
â€‹single-period inventory model